Bunge Ltd (NYSE:BG) Bid Up by Investors Despite Earnings Miss


Investors forgave agro-business giant Bunge Ltd (NYSE:BG) for missing earnings estimates during the third quarter, and instead focused on its upbeat guidance for the fourth quarter and beyond.

The stock surged 9.96% to close Wednesday at $68.81 on volume of 7.17 million shares.

Technically, on the weekly chart, the stock has broken out of an ascending triangle and closed above the horizontal resistance line of $67.60. If it sustains above that level, there is potential for a quick dash to $78.

Bunge Ltd (NYSE:BG) reports a mixed third quarter

For the third quarter, Bunge reported EPS of $0.73 which missed by $0.08, and revenue of $11.42 billion which beat by $1.11 billion and was up by 6.1% year on year.

The earnings miss came as gross profit in the agribusiness nearly halved, mainly due to inadequate supplies from Brazilian farmers.

Bumper supplies from the US helped balance out the Brazilian shortfall, however.

“Challenging market conditions and slow farmer selling led to a lower than expected quarter in Agribusiness,” said Soren Schroder, Bunge’s Chief Executive Officer in a statement. “The combination of smaller than expected soy and corn crops in South America, due to adverse weather, and slow farmer selling negatively impacted our Brazilian and Argentine origination and soy processing results.”

Drew Burke, Chief Financial Officer, said slow farmer selling in South America is likely to continue till the end of the year.

Better performance from the edible oil, milling products, fertilizer, and sugar & bioenergy businesses compensated for the drag from agribusiness.

Bunge Ltd (NYSE:BG) has high expectations from Q4 and 2017

Bunge expects a record soybean harvest in North America as farmers planted more, attracted by higher prices. Processing the bumper crop will boost Bunge’s volumes and profit margin.

“A solid fourth quarter is in sight. And we expect significant growth in 2017,” said Schroder on the conference call.

“With this year’s turnaround in Food & Ingredients, Sugar & Bioenergy and Fertilizer, we see the potential for significant earnings growth in 2017 as Agribusiness returns to historical levels of performance, supported by growing protein demand, record crops in South America, and the fact that Brazilian farmers have only priced small percentages of their next year’s soy and corn crops,” said CFO Drew Burke.


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